1. Feature, May, 2003
CRM: Key Imperatives for
Success
Executive Summary: With a little careful planning and execution, you can sidestep CRM
failure. The first of a two-part series, this article explores the business imperatives of a
successful CRM framework.
By Terry Jabali
Many organizations have spent far too much on CRM, with too little return. What were
the underlying design premises and subsequent decisions that lead to the problems?
How were these CRM strategies executed?
When we examine the underlying reasons for CRM failures, we see that planning and
execution shortcomings are often at fault. In this two-part series, we'll discuss the
business side of a sound CRM framework, and then explore the evaluation, selection,
and deployment of various IT alternatives and their impact on enterprise performance.
Valuable Visions
We've all heard of initiatives that were driven exclusively by IT and failed to meet end
user expectations. In one engagement, a global client spent nearly $10 million in
licenses and consulting fees. The department’s management team consulted with its
staff and then signed off on the functional design documents. Workers in the affected
departments, however, soon decreed that the application’s interfaces and workflows
were cumbersome, confusing, and unfriendly.
In another instance, a telco service provider invested significantly in a new CRM
application. The entire customer base was slowly migrated over to the new CRM
system, reducing the time required to retrieve customer data. The customer service
reps were given an easier call-tracking interface, but they continued to use the old
workflow, which was designed for the old call tracking system. As a result, any gains
from the new CRM system were significantly undermined, the service quality declined,
and rep turnover and operating cost increased.
On the surface, these cases were simply a matter of things not going as planned. But
when we dig deeper, it's quickly evident that there was usually a lack of CRM vision,
magnified by a poor execution. The lack of vision acts as a hinderer instead of
galvanizing the enterprise around its CRM initiative.
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The Quest for Success: Strategic Intent
In dynamic organizations, leaders are responsible for painting a vision, while the first
lieutenants keep them grounded in reality with their tactical and operational knowledge.
Managers reporting to the CxOs translate and facilitate the interpretation of this vision.
But in one recent engagement, however, the CEO confided that he felt his direct reports
spoke a completely different language. A few discussions later, this CEO sat down with
his top lieutenants and began to work out a holistic CRM scope while paying special
attention to customer expectations, industry trends, and competitive elements, among
others. They drafted a high-level vision that was translated into sub-vision components
that guided key business processes aimed at meeting and exceeding customer
expectations.
Next, a project team was formed to define critical and winning employee behavior that
would transcend the true potential of their CRM vision. Many group sessions later, while
involving representatives from various departments, the project team articulated its
vision into operational imperatives. They introduced performance metrics and linked
them to employee compensation. They even went so far as to articulate their CRM
vision on coffee mugs.
The Current and Future State of the Customer Experience
If the technology infrastructure is the backbone of enterprise performance, then CRM is
the heartbeat.
To continue with the previous example, the project team launched a more elaborate
cause-and-effect assessment to reengineer business processes and workflows. The
team examined the current customer experience (see Figure 1, page XX), paying close
attention to the current yield, bottlenecks, etc. in critical business functions as well as
assessing the behavior of the most profitable customers.
Next, the team organized the processes into three customer experience areas:
acquisition, retention, and extension, associating all three to people and system
performance dimensions. Finally, the team matched these ideal requirements to actual
CRM systems.
Figure 1:
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This project team defined the virtual customer experience (via enterprise gateways) and
the agent-assisted customer experience from the time the sales is made (acquisition) to
service and support (retention), extending it to cultivating long-term and profitable
customer relationships (extension). The focus in this engagement was on support and
service. For brevity, only process names are mentioned below:
1. Virtual customer experience: Enterprise e-business capabilities including
marketing and lead generation, customer self-service and support with governing
business rules and escalation
2. Customer + service/support staff interactions: first-time resolution, knowledge
management tools, escalations, service-level agreement automation, and notification.
3. Customer + enterprise interactions (reporting): tracking of customer touch
points.
To preserve the new mode of operation, performance measures were conceived. The
project team assigned key performance indicators (KPIs) to key business processes.
These KPIs defined what constituted a meaningful customer experience. As a result of
well-defined processes and sound performance metrics, this team was able to meet
stringent customer service-level agreements. This further differentiated this
organization’s go-to-market value proposition and set it on the course toward rebuilding
its tarnished service and support standards.
Mobilize Performance and Manage Change
Now that the company had a clearly articulated CRM model embodying strategic
imperatives, optimal business processes, and effective measurement across customer
touch points, it was time to focus on the people who would be disrupted by the
implementation.
To galvanize the organization around its new CRM vision, the project team took its well-
crafted CRM vision and mapped it to buy-in milestones and approaches across the
various user groups. From here, it developed a CRM prototype that was later tested on
a select customer segment.
And finally, several key project team members became "super users," acting as change
agents and evangelists in their respective departments. Next, these super users teamed
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with different workgroups to get cross-departmental approval on service standards. A
quick win was soon followed, further fueling the momentum.
The team was successful because it established "SMART" performance standards:
specific, measurable, attainable, realistic, and time-bound. These techniques helped
ensure that every member of the organization clearly understood his or her role in the
new CRM environment. As a result, just three months after its CRM system went live,
the company experienced significant improvements in service standards, timely
resolution, and operational efficiency, which also accounted for significant ROI over the
investment lifecycle.
We can learn lessons from both ideal and less-than-ideal project experiences. Unless
organizations revisit their past assumptions of the customer experience and then take
the appropriate steps to define how the new CRM application should behave, they'll will
miss out on the essence of CRM, not to mention the ROI.
Use of Consultants / Vendors and the Knowledge Transfer Model
Different consultancies and vendors follow different engagement models. Some are
more consultant-dependent than others. Regardless, any sound CRM engagement
must be in close partnership with client resources and enabling a phased knowledge
transfer over a short period of time.
In cases such as the previous example, the consultant acts as a catalyst to bring about
a meaningful CRM transformation, leveraging people, processes, and technology. This
person should act as facilitator, coach, project manager, and consultant, preparing the
client to drive the initiative and teaming with the client at all levels.
In turn, the client must acquaint staff with the process of CRM transformation and the
resources required for success. The consultant/vendor is initially most effective as an
advisor and coach, helping to build a cross-project team and establish a project plan
with clear roles, joint success indicators, key milestones, and relationship
dependencies. Otherwise, when things go sour, the finger pointing will follow.
CRM effectiveness and ROI
ROI should always be a key measure of your initiative. An effective form of ROI is one
that is both quantifiable in such forms as internal rate of return, net present value over a
specified period, total cost of ownership, and customer lifetime value; and qualifiable in
such forms as customer service standards, referral rates, and customer loyalty
indicators.
The Ultimate Keys to Success
By now you should have a better sense of the framework that's necessary for true CRM
transformation. It always begins with a strategic intent and vision, followed by the
optimizing and reengineering of business processes and the defining of the current and
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future customer experience. Before it can fully embody CRM-centric behavior, the
initiative must also cater to the needs of the people.
CRM should not be labeled as another facade. The fact is that enterprise initiatives
depend on your ability to lead and execute effectively. The true essence of CRM is
about acquiring, retaining, and developing your customers by using effective tools that
will empower the people in your organization.
In the next installment, we'll explore the technology aspects of CRM including:
- Two-tier vs. n-tier
- Data architecture and customer model
- Key factors of integration and scalability
- Business intelligence, business rules, analytics, and reporting
- Implications of thick vs. thin clients
- When not to customize
- Business logic: process, workflows, and GUI relationships
- What next: wireless CRM…
Bio:
Terry is a CRM Practice Lead in North America. He is a former Principal at Computer
Sciences Corporation (CSC). Please send inquiries to his personal email address:
tjabali@yahoo.com
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